Why is Right at Home offering business conversions to their franchise system?
Most of our current clients are over age 75. The first boomers will start to turn 75 in about two years. Even with our nearly 500 U.S. locations, there are 175 metro areas that still don’t have a Right at Home office. We’re preparing our company to fill as many of those markets as we can to serve the aging boomer population. As we continue with traditional franchising efforts, conversions will be a supplemental strategy and incremental way to grow the Right at Home brand.
I think the timing is perfect for independent operators to consider this as the next logical step in their business’ life cycle. Many of the independents have done quite well, but the industry is quickly changing. Like many other industries that have transitioned from a framework of fragmented brands to one dominated by the larger players, I believe it will continue to be more difficult for the independent home care companies to compete, even in smaller markets. The national brands have so much more in terms of resources at their disposal.
From an independent business owner’s perspective, why join Right at Home?
Many of these independent home care companies have been around for several years, and they may be thinking, Why do I need to do this? Why do I want to trade my independence and be bound to a franchise agreement?
There are a lot of good reasons driving a change in thinking about this, but I think the real catalyst can be tracked back to three recent industry changes.
First is increased competition. We now have approximately 70 companies franchising in home care, in addition to all of the independents out there. There are a handful of us in the 500-unit and above category, with a bunch more nipping at our heels. As bigger brands enter local markets, it’s going be increasingly more difficult for independents to stand out amongst the crowd—even in smaller markets.
Second, because so many people are now utilizing home care services, regulations have increased. This is a good thing because the regs protect consumers and families, but those who are out there operating as independents have to figure out how to comply on their own —while also trying to run their business. HIPAA, Affordable Care Act Reporting, state licensure, and in some cases accreditation are all big initiatives to tackle without some help. Any business that is in compliance with federal and state regs is a much safer overall investment in general than one who lets those things slide because they don’t have time to do it. We can help home care company owners structure their business in a way that helps them find the time to stay current on compliance issues, and we can help them streamline the process because we’re already doing the same thing with other franchisees.
Third, it’s clear that more and more care is moving into the home. Home care is now a very relevant part of the overall healthcare continuum because of our ability to prevent hospital readmissions, reduce overall healthcare costs, and provide a customer experience that preserves the highest level of independence and dignity for our clients. Many of these clients have long- term care insurance and Medicare Advantage (MA) Plans. CMS announced in April 2018 that they were going to begin allowing MA plans to include ongoing home care “maintenance” services as part of their offering, and they will not require the home care agencies who offer this service to be Medicare certified. A third of people eligible for Medicare have a MA plan. Looking forward a bit, when it comes time to begin home care for these clients and others who have insurance, they will likely end up being referred to one of the larger brands that has an existing relationship with the home care company and can offer nationwide coverage. These sources of incremental clients are both beyond reach for most independent operators today.
One final thought on this question: the independents and franchises have had a quiet coexistence of sorts for many years, with neither of us worrying too much about the other. Now, though, times have changed. A conversion program like this can help us fill in the holes in our map for purposes of national account coverage, and we can help the independents who convert take their businesses to the next level and perhaps even help them with their exit strategy plan if they are thinking about selling in the next several years.
How is our information-savvy culture changing client acquisition for home care companies?
The internet has changed everything. We still see most of our clients coming from community referral sources, but there is definitely a shift underway as more focus is placed on going directly to consumers. Having a strong web and social media presence for almost any business has never been more important. Whether a client finds you online as part of their initial search or later after a recommendation from someone else, many clients now go online to research the home care companies before making a decision. But small business owners, especially those who run home care companies, don't typically have the time or the expertise to establish a great online presence. For the few that do, they quickly learn that keeping up with that presence can be a full-time job! This is why Right at Home manages 100 percent of that presence for our franchisees. We handle all of the technology and content updates so the franchisees can focus on other aspects of their business.
What value does Right at Home bring to independent home care businesses to justify paying royalty and advertising fees?
Different operators are going to appreciate different aspects of our conversion franchise offering, but I feel like we have a lot to offer. Any good conversion program will pay for itself by helping independents access incrementally more customers, saving them money with national vendor relationships and discounts, and helping them shore up their business efficiencies and profitability. I believe Right at Home has to do all three of those for the program to be effective. Just as a quick example: what would it cost an independent home care company to hire a marketing agency to create and maintain an effective website and social media presence with the latest technology and SEO strategies? That cost savings alone puts a big dent in the money that a franchisee spends in royalties, not to mention the huge time savings of trying to find the best marketing agency to do the job in the first place. Then you start layering in the value of incremental revenues from national accounts and partnerships, professional business coaching, national brand presence, etc. and the value proposition builds very quickly.
Will you train conversion franchisees differently than traditional ones?
Yes. Our coaching is customized to each franchise. Trying to apply a cookie-cutter approach to training independent owners and supporting them would be shortsighted on our part because it ultimately wouldn’t be effective. Our process begins with an assessment that happens in the conversion franchisee’s office. This will be the foundation of their training and onboarding plan. During the visit we will interview the franchisee to see where they feel they need help, and then provide feedback based on our experience as well. I think the conversion franchisee will appreciate the fact that we’ve literally coached hundreds of franchise owners in this industry, and that the coaching we offer them will be in large part based on that experience. We can help with everything—sales, business operations, human resources, profitability, marketing, etc.—but they may only need help in one or two areas. The visit will uncover the priority areas and provide clarity for where to place focus both initially and long-term.
Are there any risks in a conversion program?
The risk with most conversion programs is twofold. First, you have to make sure that the conversion franchisee fits into the overall system. Does he or she embrace the core values? Are they going to be okay with us coming into their business and having a look around, making suggestions along the way? Are they willing to do things differently in their own business, and will they engage with the corporate office and other franchisees? If you don’t have alignment on these things, the conversion will not work. Second, there is a risk to our brand if we allow the wrong people to use it. This isn’t all that different than what we manage with our traditional franchising effort. In the case of conversions, since they already run home care companies we are going to require community references from them. Conversion prospects will also be interviewed by one of our current franchisees as well, perhaps even one in their region that may have insight to offer on their reputation in the community.
When you talk about “engaging” with the corporate office and other franchisees, what does that mean?
We want franchisees that want to be here. That means they are excited about working with us, and about being part of a franchise system. I think there’s value in franchisees getting to know each other, learning from each other, and at times leaning on one another during a particularly tough time. Right at Home hosts a content-rich annual convention that is well-attended every year, which offers plenty of opportunity for franchisees to share best practices. Also, many of our franchisees belong to peer groups that focus on business operations and profitability. While these groups have a corporate facilitator to keep things moving, each one is a unique, invitation-only group that sets their own priorities. These groups also typically meet once each year at a place that doubles as a nice vacation spot, which is a great way to squeeze in a much-needed vacation—on your own, or with franchisees that you have a lot in common with!
How will you minimize the risks and obstacles?
As always, we will let our culture and core values guide us in our decision-making. That means we will approach this program with a collaborative mindset on working together with conversion franchisees to improve their business. We will be very authentic in our communications before they sign so people can more fully understand not only what it’s like to be part of our franchise system, but also what it’s like to work with us. We will tackle each conversion opportunity with a high degree of accountability and integrity, and we’ll be very approachable not only before the conversion, but also for the entire term of the relationship. We want the conversion to go well, and the best way to do that is to make sure everyone has accurate expectations of each other. If we do that well, we will make good decisions.
Learn more about our conversion program or get in touch with us here!